What is a Budget?

When Aaron Wildavsky wrote his legendary book The Politics of the Budgetary Process (now classic enough to be a Google Book!) he argued that ultimately budgets are a set of choices we make about society.   As Gerald Sieb pointed out in the WSJ this morning the long term trend on making choices, especially intelligent choices in our federal budget could not be clearer.  

The chart at the right shows spending trends (as % of GDP) that two important categories in the budget represent over time.   Notice that since 1980 spending on mandatory programs, like Social Security, has increased from just under 11% to more than 14% of GDP.   Over the same period, non-defense discretionary spending has decreased from 5.2% to 4% and is projected to decline in the Senate budget to 2.5% in the next ten years.

The second chart is from John Taylor and projects federal outlays based on the house and senate budget proposals.   Note the small print at the right of the chart which highlight that at the end of the projected cycle the Senate expectations of revenue are still well below outlays.

So if we take the path proposed by the Senate, we a) do not balance the budget and b) reduce the amount of discretionary spending in the budget, which is already a very low figure.

Just because the numbers add up does not mean that the policy does.